MPs want a watchdog to curb rotten boardrooms

A NEW watchdog is needed to tackle corporate excess in the wake of the collapse of HBOS, MPs have said.

Too many bad loans after years of excessive risk-taking by bosses caused the bank’s failure in 2009.

It was rescued by Lloyds at the height of the financial crisis, which in turn had to be saved with a Government bailout.

A report by the House of Commons Treasury Select Committee has argued that regulators missed chances to hold those responsible to account.

MPs said the Financial Services Authority had failed fully to review the collapse of HBOS and fellow lender Royal Bank of Scotland, adding it was ‘extraordinary’ that this was resisted ‘even after strong prompting’ by Parliament.

The FSA was axed in 2013 and replaced by the Financial Conduct Authority and Prudential Regulation Authority.

The MPs said these organisations were also slow to act because legal advice suggested they should wait until after attempts to punish those responsible.

The review was not published until November last year, six years after the bank failed.

The committee would like responsibility for enforcement action taken from the PRA and FCA and given to a new body, freeing up the two groups to focus on supervising banks.